IPO: State Property Chief Says Government to Offer 25% of Croatia Electra via IPO

Mladen PejnovicLPJ Issue 129, April 20 2015

On 14 April, Mladen Pejnovic (SDP), Head of the State Property Management Administration (DUUDI), told Bloomberg News that the Croatian government was planning to offer 25% of the state-owned electricity company, Croatia Electra (HEP), for sale in an initial public offering (IPO) on the London Stock Exchange and Zagreb Stock Exchange (ZSE) in 2015.  Pejnovic said the government expected to yield between €264.2 million and €396.3 million from the IPO, which will be reinvested into the company.  The DUUDI chief added HEP had plans to acquire assets in Slovenia, Bosnia-Herzegovina and Montenegro.

HEP (i.e. HEP Group) provides a range of energy services (e.g. production, distribution and supply of electricity, as well as heating, supply of natural gas, etc.)  The HEP Group owns and operates over 4,000 MW of installed generation capacity and 974 MW of heat production capacity. The group’s portfolio includes 26 hydroelectric plants and eight thermal power plants powered by oil, natural gas or coal.  The company is also a co-owner of the Krsko Nuclear Power Plant (Slovenia) and TE Plomin II (together with Germany’s RWE).

In February 2014, the government decided to transfer the delivery of natural gas supplies service from the petrochemical and gas company INA’s Natural Gas business unit to HEP.  As a result, the group became the national wholesale gas supplier for a period of three years (see LPJ 074).

In 2014, HEP is expected to post total operating revenues of €1.32 billion, with a net profit of €97.7 million.  According to DUUDI’s figures, in the first nine months of 2014, HEP’s consolidated net profit surged to €260.3 million from €113 million in 2013.

In March 2014, the credit rating agency Moody’s affirmed HEP’s Ba2 corporate family rating (CFR), adding that the rating outlook remains stable.  Moody’s said HEP’s stable outlook reflects the group’s resilient financial performance, aided by a continuing support from the state, which has bolstered the company’s ability to access the debt market on an ad-hoc basis…

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